Latin America had a debt crisis in the early 1980's.
The debt crisis originated from a surge in oil prices in the 1970's and abundant savings by oil exporters, which were channeled to economies growing. Also Mexico announced that they couldn't pay what they owed to the international creditors. Countries like Argentina, Brazil, Mexico, Peru, and others built up important stocks of currency debt. it became lethal when interest normalized. Debt ratios were pushed to unsustainable levels. in the 60's and 70's the economy was booming. This crisis has been on going for two decades.The first approach they took to the debt problem was denial. All that was needed was time to implement a drastic fiscal adjustment, for which the International Monetary Fund (IRF). Sponsored by U.S, it would provide the refinancing.Developing countries as a whole Latin America owe over $600 billion dollars. The debt crisis is far from over.
This is what they owe to other countries
This is what they owe inside the countries
Treasury Secretary James Baker
There was a baker plan proposal that began in 1985 where debt crisis could only be resolved through growth by the debtor countries. Sustained growth must be greater domestic savings, and of the savings at home. Baker wanted loans from banks and the banks were uneasy with giving out the loans because of the existing angry share holders. Even though the banks went along with it over the years there was not any significant help towards the baker plan.
Challenges
Latin America faces challenges, but in an environment of global financial problems, having reduced external debt ratios is one factor enhancing the region's resilience to the current crisis. Have quite a bit of debt to pay off still.
Debt in Latin America
Latin America had a debt crisis in the early 1980's.
The debt crisis originated from a surge in oil prices in the 1970's and abundant savings by oil exporters, which were channeled to economies growing. Also Mexico announced that they couldn't pay what they owed to the international creditors. Countries like Argentina, Brazil, Mexico, Peru, and others built up important stocks of currency debt. it became lethal when interest normalized. Debt ratios were pushed to unsustainable levels. in the 60's and 70's the economy was booming. This crisis has been on going for two decades.The first approach they took to the debt problem was denial. All that was needed was time to implement a drastic fiscal adjustment, for which the International Monetary Fund (IRF). Sponsored by U.S, it would provide the refinancing.Developing countries as a whole Latin America owe over $600 billion dollars. The debt crisis is far from over.Treasury Secretary James Baker
There was a baker plan proposal that began in 1985 where debt crisis could only be resolved through growth by the debtor countries. Sustained growth must be greater domestic savings, and of the savings at home. Baker wanted loans from banks and the banks were uneasy with giving out the loans because of the existing angry share holders. Even though the banks went along with it over the years there was not any significant help towards the baker plan.Challenges
Latin America faces challenges, but in an environment of global financial problems, having reduced external debt ratios is one factor enhancing the region's resilience to the current crisis. Have quite a bit of debt to pay off still.Sources
http://www.imf.org/external/pubs/ft/fandd/2009/03/dataspot.htm
http://www.brookings.edu/opinions/2011/0602_greek_debt_crisis_yeyati.aspx
http://www.angelfire.com/nj/GregoryRuggiero/latinamericancrisis.html